97-25921. Consumer Leading; Delay of Compliance Date

[Federal Register Volume 62, Number 189 (Tuesday, September 30, 1997)]
[Rules and Regulations]
[Pages 51006-51007]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-25921]


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FEDERAL RESERVE SYSTEM

12 CFR Part 213

[Regulation M; Docket No. R-0892]


Consumer Leading; Delay of Compliance Date

AGENCY: Board of Governors of the Federal Reserve System.

ACTION: Final rule; delay of compliance date.

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SUMMARY: Following a review under the Board's Regulatory Planning and 
Review Program, the Board published a revised Regulation M, which 
implements the Consumer Leasing Act on October 7, 1996. The final rule 
contains a significant number of substantive revisions to the 
regulation. It essentially establishes a new disclosure scheme that 
should substantially improve consumer understanding of automobile 
transactions. The new disclosure scheme required the preparation of new 
forms and the reprogramming of computer software. Mandatory compliance 
with the revised rule was to begin on October 1, 1997. The Board is 
delaying that compliance date until January 1, 1998, to facilitate 
compliance with the regulation and to ensure that consumers receive 
accurate and meaningful disclosures.

DATES: The mandatory compliance date for the final rule published at 61 
FR 52246 (Oct. 7, 1996) is delayed until January 1, 1998.

FOR FURTHER INFORMATION CONTACT:
Kyung H. Cho-Miller or Obrea O. Poindexter, Staff Attorneys, Division 
of Consumer and Community Affairs, Board of Governors of the Federal 
Reserve System, Washington, DC 20551, at [phone] or 452-3667. 
For users of Telecommunications Device for the Deaf (TDD), please 
contact Dorothea Thompson at [phone].

SUPPLEMENTARY INFORMATION: The Consumer Leasing Act (CLA), 15 U.S.C. 
1667-1667e, was enacted into law in 1976 as an amendment to the Truth 
in Lending Act (TILA), 15 U.S.C. 1601 et seq. The Board was given 
rulewriting authority, and its Regulation M (12 CFR part 213) 
implements the CLA.
    The CLA generally governs consumer leases of personal property 
involving $25,000 or less and a term of more than four months. An 
automobile lease is the most common type of consumer lease covered by 
the CLA. Like the credit provisions of the TILA, the CLA requires 
lessors to provide uniform cost and other disclosures in consumer lease 
transactions and in lease advertising. Prior to entering into a lease 
agreement, lessors must give consumers fifteen to twenty disclosures, 
including the amount of initial charges to be paid, an identification 
of leased property, a payment schedule, the responsibilities for 
maintaining the leased property, and the liability for terminating a 
lease early.
    Following a review under the Board's Regulatory Planning and Review 
Program, the Board published a revised Regulation M on October 7, 1996 
(61 FR 52246), and a new staff commentary on April 4, 1997 (62 FR 
16053). The final rule, which contains a significant number of 
substantive revisions to the regulation, essentially establishes a new 
disclosure scheme that should substantially improve consumer 
understanding of automobile lease transactions. The new disclosure 
scheme required the preparation of new forms and the reprogramming of 
computer software.

[[Page 51007]]

    The Board has been asked by representatives of the automobile 
leasing industry--including leasing companies, automobile dealerships, 
and vendor support services--to delay the mandatory compliance date of 
the new Regulation M rules beyond October 1, 1997. The request is based 
on the current state of implementation of the new leasing software at 
the 22,500 new-car dealerships that arrange for automobile leases 
provided through approximately 9,000 independent lessors. Based on the 
information that they have shared, less than half of the dealerships 
have the necessary software programs in place that would enable them to 
produce computer-generated disclosure statements by October 1, 1997. In 
some cases, they would have in place only one of the five or six lessor 
programs that they typically make available to consumers. The 
alternative is to complete the leasing forms manually, with resultant 
delays and a great potential for errors that would subsequently have to 
be corrected.
    The Board believes that consumers will not be well served by 
proceeding on the October 1 schedule. Accordingly, to better ensure 
that consumers receive accurate and meaningful lease disclosures, the 
Board has delayed the mandatory compliance date to January 1, 1998.

    By order of the Board of Governors of the Federal Reserve 
System, September 25, 1997.
William W. Wiles,
Secretary of the Board.
[FR Doc. 97-25921 Filed 9-29-97; 8:45 am]
BILLING CODE 6210-01-M